Diamonds are for Rabbis: Ice.com and Its Founders Heat Up with $47 Million From Polaris and Ignition

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I rounded the wrong way when I got Shmuel Gniwisch on the phone, referring to the $46.6 million financing round his online jewelry retail company—Ice.com—had just closed as $46 million. “It’s $47 million,” the Ice CEO corrected. Then there was a pause. “That’s 47 parties.”

He was joking, of course—breaking the ice, you might say. And why not? He was one happy rabbi (more on that in a bit). The Series B funding, formally announced today, was led by Waltham, MA-based Polaris Venture Partners and included return investor Ignition Partners of Bellevue, WA. It marked only the second time Ice had taken in funding (well, third if you count Bill Gross—more on that, too). And I think you can view it as a vindication. It has been a long haul to get to this big-money inflection point—from four rabbis in Montreal to four rabbis in Gross’s Idealab Internet incubator in Pasadena to four rabbis buying back their troubled business, returning to Montreal and turning it into the kind of operation that could attract big money from big VCs. “We’re very profitable and having a great time,” says Gniwisch, who describes his high adventures as movie-like—“part of the new Nicholas Cage series.”

This is the way the script reads. Gniwisch grew up in a family jewelry business that manufactured affordable jewelry for big retailers. Then, in 1999, the new generation—Shmuel, his two brothers, Mayer and Pinny, along with brother-in-law Moshe Krasnanski (all are ordained rabbis)—got the retail bug. “We decided that we would like to take this to this new thing called the Internet,” Gniwisch says. It was the dot com heyday, he explains. Retail sites like Priceline, Amazon, and Buy.com all seemed to be going gangbusters. “Why shouldn’t we be able to tap into this inventory that’s sitting there anyhow and give it to the consumer and make a little for being the matchmaker?”

The inventory he’s speaking of was his parent’s, and the new business was called Buyjewel.com. The idea behind it (and now Ice) was to bring affordable, stylish jewelry—such as diamond rings, bracelets, and earrings, mostly in the $100-$500 range—to more mainstream consumers. “We are great merchandisers. We’re trend setters, we’re tastemakers,” Gniwisch says.

Not long after their September 1999 launch, Bill Gross invited them to join Idealab, which churned out dozens of companies in this period, including eToys and Goto.com (later named Overture), a pioneer in contextual advertising for search engines. Gross and his team had a lot of experience in e-commerce and online retail. Gniwisch says it seemed like “a match made in heaven.” So they accepted Gross’s offer of $7 million for roughly 60 percent of Buyjewel, which was already taking in some $30,000 a month in revenue—and in early 2000 moved down to Pasadena. “Four rabbis with big beards,” … Next Page »